Overview of verification events during the verification of the end-beneficiary’s identity in the RPVS. The article explains the obligations of the authorized person and the public sector partner regarding winter verification, changes to the KUV, the conclusion of contracts, and the performance of contracts pursuant to Section 11 of the RPVS Act.
The identification of the ultimate beneficial owner (hereinafter “UBO”) of a public sector partner (hereinafter “PSP”) is carried out upon its registration in the public sector partner registry (hereinafter referred to as the “register”) by an authorized person who is required to act impartially and with professional care and to fulfill other obligations arising from Act No. 315/2016 Coll. on the Register of Public Sector Partners and on Amendments to Certain Acts (hereinafter also referred to as the “Act on the RPVS”) and other legal regulations.
The authorized person performs activities for the PVS related to the registration process and, together with the PVS, is responsible for the accuracy, timeliness, and completeness of the data entered in the register, the identification of KUVs, verification of KUV identification, and their regular updating.
In addition to the initial identification of KUVs and the entry of the PVS into the register, the authorized person performs verification of KUV identification (so-called verification) even during the term of the PVS’s entry in the register, particularly in the case of so-called verification events. Verification events are exhaustively defined in Section 11(2)(a) through (e) of the RPVS Act, pursuant to which, quote:
“(2) An authorized person is required to identify the beneficial owner upon the first entry in the register and subsequently verify the identity of the beneficial owner
a) in connection with the submission of a proposal to register a change in the beneficial owner,
b) upon their registration as an authorized person in the register,
c) as of December 31 of the calendar year, unless paragraph 8 provides otherwise,
d) in connection with the conclusion of a contract whose performance exceeds the value of performance pursuant to § 2(2) and (3), or its amendment, no earlier than ten days prior to the conclusion of the contract or its amendment,
e) in connection with performance under a contract whose total value exceeds 1,000,000 euros over 30 days, no earlier than ten days prior to such performance under the contract.”
If the identification or verification of the KUV’s identification was performed by an authorized person within the six months preceding the conclusion of the contract, an amendment to the contract, or performance under the contract, then an exception to the mandatory verification of the KUV’s identification applies to the verification events under subparagraphs (d) and (e), an exception to the mandatory verification of the KUV’s identity applies. This exception, regulated in Section 11(3) of the RPVS Act, was established to eliminate multiple verifications of the KUV’s identity. For a clearer understanding, we provide the following example: PVS was registered in the register by an authorized person on February 1, 2021, and KUV identification was performed at the time of its registration. In May 2021, the PVS plans to enter into a contract whose performance exceeds the financial limits set by law. The conclusion of such a contract constitutes a verification event pursuant to Section 11(2)(d) of the RPVS Act, in which case the KUV identification must be verified. Since the KUV was last identified on February 1, 2021, i.e., no more than six months prior to the conclusion of the contract, the exception under Section 11(3) of the RPVS Act applies, and verification of the KUV’s identity pursuant to Section 11(2)(d) of the RPVS Act is not required in this case.
In addition to verification events where KUV verification is mandatory, the RPVS Act provides in Section 11(4) for the possibility of voluntary verification of KUV identification (the performance of which may be agreed upon in writing between the authorized person and the PVS), the need for which arose from the practical application by authorized persons and the PVS. Based on this provision, it is possible to perform verification of the KUV’s identification at any time, even without any of the aforementioned verification events occurring.
Verification of the KUV’s identity ensures that the data on the KUV recorded in the registry is up to date. Through their actions, the authorized person performs independent control and verification activities vis-à-vis the PVS, and is required to act independently and impartially, thereby verifying the accuracy and completeness of the recorded data regarding both the KUV and the PVS. In the event that the obligation to verify the identification of a KUV is not fulfilled, the law allows the PVS, in accordance with Section 15(2) of the RPVS Act, to impose sanctions, including, among other things, refusal by the public sector to perform under the contract (for the duration of the failure to fulfill the obligation). At the same time, if false or incomplete data regarding KUVs or public officials is entered into the register, or if the obligation to submit a request to amend the recorded data is not fulfilled, this conduct may be sanctioned by a fine specified in the RPVS Act. You can learn more about sanctions under the RPVS Act in our article “Sanctions under the Public Sector Partner Register,” which is available at: https://www.legalfirm.sk/sk/partner-verejneho-sektora/clanok/sankcie-pri-rpvs.
Submission of a Request to Record a Change in KUV
A verification event within the meaning of Section 11(2)(a) of the RPVS Act is a change in the KUV – either a change in the registered data regarding the KUV (most commonly a change in the permanent residence address or a change in the KUV’s surname) or a change in the KUV’s identity (another person meets the conditions for identification as the KUV, or the person no longer meets the conditions for identification as the KUV).
Change of Authorized Person
Each PVS must have a sort of intermediary or representative in the registry—an authorized person who performs all activities and actions related to the identification and verification of KUV identification on its behalf, as required by the RPVS Act. A PVS may only have one authorized person registered in the registry at any given time. However, a single authorized person may perform the activities of an authorized person for multiple PVSs. In the event of termination of their cooperation, there are two options: the first is the deletion of the PVS from the register, and the second is the deletion of the authorized person from the register, in which case the PVS itself remains registered (this involves the deletion or change of the authorized person in the register). An authorized person may terminate their cooperation with a PVS, for example, because the PVS is not providing the necessary cooperation required by the RPVS Act for the proper fulfillment of the authorized person’s obligations. If an authorized person is deleted, the PVS is required to ensure the registration of a new authorized person no later than 30 days after the deletion.
Regular verification of KUV as of December 31 – “So-called WINTER VERIFICATION”
The most common verification event is the verification of KUV identification as of December 31 of each (relevant) calendar year. The purpose of this verification is to ensure that data is updated at least once a year. PVS often believe that if no changes have occurred in their entity since the last KUV identification verification, they are not required to cooperate with the authorized person during the regular KUV verification as of December 31 of the calendar year. Since the verification of KUV as of December 31 is a mandatory verification event arising from Section 11(2)(c) of the RPVS Act, the authorized person must update the data, and the PVS is obligated to cooperate with them in doing so. The purpose of the provision of Section 11(2)(c) of the RPVS Act is to declare the status as of December 31 of the relevant calendar year. However, the notification of identity verification may also be sent after December 31 of the calendar year. The deadline for sending the notification of identification verification was set in Section 11(8) of the RPVS Act as February 28 of the following calendar year. If an authorized person discovers a change in the recorded data regarding the KUV, they are required to proceed in accordance with Section 9 of the RPVS Act.
Verification upon conclusion of a contract and its amendment
Identity verification pursuant to Section 11(2)(d) of the RPVS Act is intended to ensure the accuracy and completeness of KUV data prior to the conclusion of a contract or its amendment. The obligation to verify the KUV’s identity applies to the conclusion of a contract or an amendment to a contract with a value exceeding the financial limits under Section 2(2) and (3) of the RPVS Act, and must be performed no earlier than ten days prior to the conclusion of the contract or its amendment. In this case, the PVS must inform the authorized person of the occurrence of this verification event well in advance.
Verification during contract performance
Verification of the KUV’s identity prior to contract performance, where the total value exceeds one million euros over 30 days, is required before the actual performance of the contract takes place. Similar to the previous case, the RPVS Act stipulates that verification of the KUV’s identity must be performed no earlier than ten days before the contract performance is to take place. In this case, the PVS must also inform the authorized person well in advance, as the authorized person is unable to determine the planned performance of the contract on their own.
The regular KUV verification as of December 31, 2021, known as the winter verification, is currently approaching. We would like to remind you that the winter verification is one of the aforementioned verification events during which verification of the PVS KUV identification is mandatory. Therefore, please do not forget that it is necessary to provide the authorized person with the required cooperation. If you have already received an email requesting supporting materials and documents for the so-called winter verification, please do not ignore it and fulfill your legal obligation related to registration so that all obligations arising from the RPVS Act are met within the statutory deadlines.
